Biglaw, Partner Issues

The Financials From A Single Biglaw Firm Are Dragging Down The Entire Industry

Any comparison to the dark days of 2008-09 can be a scary one for associates.

By  
on

Businessman has lost moneyAs ATL noted yesterday for the first time since the Great Recession, the revenue per lawyer, or RPL, as tracked by American Lawyer‘s Global 100 has taken a dip. And that dip is caused by a single law firm:

What could have caused this decline in revenue per lawyer? We’ll refer to this as the Dentons dip. As noted by Am Law, thanks to the firm’s mega-merger with Dacheng — a firm 4,000 lawyers strong — RPL for the entire Global 100 sank like a stone. But for the Dentons Dacheng merger, the Global 100’s RPL would have increased by 0.2 percent, to $841,346. However, while 23 firms saw an increase in RPL of over 5 percent, more than a third experienced declines in 2015 — the most since the Great Recession. This could be a trend worth watching over the course of this year.

And it’s becoming clear that this market shift is far from typical, as Big Law Business reports:

Bruce MacEwen, a law firm consultant who has been outspoken about The American Lawyer financial rankings, said that he’s never seen an entire metric skewed by a single law firm.

“That is new to me,” he said. “It had to happen, sooner or later, because these firms are getting so big.”

But as MacEwen does note, Dentons’ unique structure, that of a verein — different law firms that work under the same brand — also plays into their surprisingly low revenue per lawyer.

Now Dentons has responded to American Lawyer’s report. Perhaps unsurprisingly the firm takes the position that this metric doesn’t reflect the quality of the firm or the work they do:

As you know, Dentons has a longstanding policy of not commenting on the accuracy of estimates of Dentons’ global financial performance made by the media. However, this story reinforces a point that we have made consistently: focusing on global averages of financial figures such as RPL or PEP reveals virtually nothing regarding the legal profession, the quality of a firm or its success. The wide variance in economic standards across the multiple regions served by a global law firm makes such global averages meaningless. The American Lawyer’s observation that one large firm can change the average by itself demonstrates our basic point — averages often disguise meaningful information, not provide it. Dentons continues to measure its success through the integration, growth and innovation initiatives that enhance our service offerings to clients, not the pursuit of irrelevant metrics.

Sponsored

Biglaw associates may have just gotten raises, but any comparison to the dark days of 2008-09 can be a scary one. For the sake of associates, and their student loans, let’s hope Dentons is right and this isn’t a sign of bad things to come for the industry.

One Mega-Firm Dragged Legal Industry Ranking: Report [Big Law Business]
For the World’s Top-Grossing Firms, Slow and Steady Growth [American Lawyer]

Earlier: The Global 100: The Richest Law Firms In The World (2016)

Kathryn Rubino is an editor at Above the Law. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

Sponsored

Topics

, , , , , ,